Dallas, Texas 12/24/2014 (FINANCIALSTRENDS) – China-based NQ Mobile Inc (ADR) (NYSE:NQ) recently announced that its Board of Directors has approved a share buyback program. The company intends to buy back up to $80 million of its shares over the next 12 months.
The announcement boosted the investor confidence, which made the stock surge more than 35% to $4.68. More than 18.75 million shares changed hands on Tuesday compared to its average trading volume of 2.83 million shares. However, the stock is still trading quite low from its October 2013 price of $24 per share, when the Muddy Waters allegations made the stock drop below $10.
The Share Repurchases
Under its share repurchase program, China-based NQ Mobile Inc (ADR) (NYSE:NQ) may buy back shares from time to time in private transactions, on the open market, in block trades or through other permissible means. The repurchases will be made in accordance with applicable rules and regulations and depending on market conditions. The company will fund such repurchases from its existing cash balance.
The company’s market cap was $192 million as of Tuesday’s close and the authorized repurchase program represents approximately 40% of this market cap. The company has reported cash and short-term investments worth $278 million as at September 30, 2014.
Muddy Waters fraud accusations and NQ Mobile Inc (ADR) (NYSE:NQ)’s delay in submitting investigation reports hampered much of the company’s reputation and stock value. Many analysts stopped following the stock and only Topeka Capital Markets analyst was reported to be following this stock. Topeka set a Buy rating in September with a price target of $8.50.
Recently, Muddy Waters also pointed at sudden disappearance of NQ Mobile founder, Henry Lin, who is speculated to be facing anti-corruption probe in China and might be under house arrest somewhere.
With the latest announcement surrounding the massive buyback program, it would be interesting to see what all measures NQ Mobile will implement through 2015 and beyond to restore its damaged reputation.